In the ongoing court battle against eight social media personalities led by Zack Morris on numerous counts of classic pump-and-dump schemes, the controversial online influencer is arguing that one of the counts alleging money laundering should be dropped.
In a filing with the Southern District Court of Texas, Morris (legally Edward Constantinescu) asked the court to dismiss count 21 of the case, arguing that it “fails to allege a legally cognizable predicate act of ‘racketeering’.”
“In fact, the Indictment has nothing to with racketeering or money laundering. Rather, the government uses [count 21] as a vehicle to seek forfeiture of Constantinescu’s family home and other properties. In its rush to include this dubious count, the government has even incorrectly identified properties belonging to other defendants as being owned by Constantinescu,” the defendant said.
Count 21 is a charge solely on Morris for violating US Code section 1957, which criminalizes “engaging in monetary transactions in property derived from specified unlawful activity.”
Section 1957 states “whoever, in any of the circumstances set forth in subsection (d), knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished as provided in subsection (b).”
Morris’ legal team argues that the section criminalizes racketeering based “money laundering,” citing a previous section that defines “specified unlawful activity,” but notably excludes “securities and commodities fraud” and “defining attempt and conspiracy to commit mail fraud and other fraud offenses.”
Thus, to establish a money laundering offense under section 1957, “the government must allege and prove that [Constantinescu] engaged in a monetary transaction in property ‘derived from specified unlawful activity’,” the filing said.
He further said that count 21 cites the violation based on “conspiracy to commit securities fraud,” which in itself is based on the counts of charges alleging Morris committing securities fraud.
“Neither charge constitutes ‘specified unlawful activity’ which may form the predicate for a money laundering charge under section 1957,” Morris’ counsel said in the filing.
In December, the Securities and Exchange Commission filed the charges of fraud against Morris, together with Perry Matlock (aka PJ Matlock), Thomas Cooperman (aka Tommy Coops), Gary Deel (aka Mystic Mac), Mitchell Hennessey (aka Huge Henne), Stefan Hrvatin (aka LadeBackk), and John Rybarcyzk (aka Ultra Calls). Daniel Knight (aka Deity of Dips) is also named a co-defendant as he “aided and abetted” the scheme through his podcast with Hennessey. Collectively the group is referred to as Atlas Trading.
According to the agency, the gang (as they would refer to themselves) “earned approximately $100 million from this stock-manipulation scheme.”
Soon after, a federal grand jury delivered an indictment on the eight people–known in the space as the “Goblin Gang”–and conviction of the charges could carry up to 25 years in jail on top of penalties.
Many of the defendants, including Morris, are currently out on bail.
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